An arctic storm is bearing down on Texas almost a year after another freeze caused catastrophic blackouts, setting the state’s residents on edge and posing a major test of reforms to its power grid.
Officials said they do not expect this week’s weather to be as severe, and the state’s governor Greg Abbott sought to reassure Texans that the grid had been fortified.
But he backtracked from comments last November when he guaranteed “the lights will stay on” this winter. He said this week “nobody could guarantee” that there would not be any outages, feeding unease that the energy system remained vulnerable.
Power generation collapsed as a cold blast gripped Texas last February, freezing natural gas wellheads and coal piles and icing wind turbines just as demand for heating spiked.
The blackouts that plunged millions into darkness for days have been blamed for hundreds of deaths and inflicted as much as $130bn in economic damage on the state.
The fallout prompted a host of reforms, including new regulations that threatened fines of as much as $1mn a day for power plants that were not adequately winterised. Abbott said 99 per cent of power generators met the new standards.
Brad Jones, interim chief executive of the Electric Reliability Council of Texas, or Ercot, which manages the state’s electricity flows, said “grid conditions remain strong” and there would be enough capacity to meet a forecast 72 gigawatts of peak demand this week.
But he added local power outages were possible if freezing rain damaged local transmission equipment. Ercot has issued a “winter weather watch” until Sunday.
Despite assurances from Texas’s officials that the grid would hold up, analysts say the state’s natural gas production system, which has not been subjected to the same stringent winterisation regulations, remains a major unaddressed risk.
Reports blamed the blackouts in part on the slowdown of the state’s gas system as wellheads, pipelines and other equipment froze.
Vistra, the state’s largest generator, said “most” of its problems during last year’s storm were because of “insufficient gas supply and pipeline pressures”.
Energy companies and traders will be watching prices closely for signs of stress after last year’s storm sent gas and power prices soaring, causing financial chaos in Ercot’s wholesale energy market and pushing a number of power retailers into bankruptcy.
Wholesale electricity prices were about $25 a megawatt hour across Texas on Wednesday, a fraction of the $9,000 price through much of last year’s storm.
Giuliano Bordignon, a power analyst at S&P Global Platts, said volatility could follow the cold front.
“The real test will be on Friday morning. Demand is projected to be an all-time high for winter,” potentially stressing the grid’s capacity if there are generation outages again, he said.
Data from S&P Global Platts has shown gas supplies from the state’s largest oil and gasfield, the Permian Basin, falling sharply on cold days in recent weeks, highlighting a potential vulnerability to the storm.
“Even small reductions in gas supply to power plants as observed during cold days in January will have an outsized impact,” Bordignon said.